Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: X Y Zebra who wrote (25)	5/3/1998 9:21:00 AM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 3536

Mornin' Mr Z, The Economist has a long track record of being skeptical about the Euro. I tend to agree with much of their reasoning (it is one of my favorite publications). You are right that it is going to be a very interesting period and it will be interesting to see whether Britain ever joins. As far as whether the Euro is a success that will be based on what you call success. Once the Euro is established there will be no going back. The countries in are there for good to all intents and purposes. Initially I believe they will be a success for a couple of reasons. Monetary policy will likely be heavily influenced by the needs of the core economies, Germany and France. Those two need job growth so rates are likely stay low for the time being. This will cause pretty strong growth in the other economies which will help sell the program. In addition there will be structural benefits from the removal of currency barriers. The real questions for the Euro will come down the road. When all the structural benefits have been achieved. When the core economies are experiencing inflationary pressure and need high rates at the same time as the others need low rates. When the German and French economies require different policies. That is when the real tests will come. Frankly I don't believe a political alliance will be able to deal with those conditions. But they won't be able to withdraw from the Euro so the inevitable long term solution will be full political union. And that will be very tough to implement. IMO. Henry